Bodily Injury and Property Liability Coverage

• Liability auto insurance pays for damages you inflict on other drivers, the occupants of their vehicles and property damage you cause. Liability coverage is often split into three separate categories of coverage: bodily injury to one person, multiple people and property damage. For example, you might carry $25,000 bodily injury liability for one person, $50,000 for all occupants and $25,000 for property damage. If you crash into another car, your insurance company would pay $25,000 toward damage you inflicted on the other car and $25,000 toward medical bills the other driver incurs or $50,000 toward the medical bills of the other driver and his occupants. Minimum required coverage varies from state to state.
  
  

Uninsured and Underinsured Motorists

• Uninsured and underinsured motorist coverage pays for your medical bills and possibly for damage to your car when drivers without insurance or with inadequate levels of insurance crash into you. If a driver who crashes into you carries the required level of liability insurance, it will pay for some or all of the damage you suffer. But when the other driver doesn't have liability insurance or his coverage limits are too low, your uninsured and underinsured motorist coverage can pay for the damage that exceeds his coverage limits. Not all states require uninsured and underinsured coverage.
  
  

Personal Injury Protection

• Personal injury protection insurance pays a driver for her own medical bills, lost income and other expenses that can arise as a result of an accident. PIP coverage is sometimes called "no fault" coverage because you can receive compensation from PIP insurance whether you were the cause of an accident or not. According to Edmunds, you need to purchase PIP coverage if you live in Arkansas, Delaware, Florida, Hawaii, Kansas, Kentucky, Maryland, Massachusetts, Michigan, Minnesota, New Jersey, New York, North Dakota, Oregon, Pennsylvania or Utah.
  
  

Other Coverage Types

• Collision coverage pays for damage your car suffers from accidents while driving. Comprehensive coverage pays for damage to your car from other events like fires and storms. Collision coverage and comprehensive coverage are optional so they are not needed to lawfully drive a car, but many car owners consider them a necessity because they protect the car's value. The more valuable your car, the more important it is to carry optional coverage.